“The One About The Trillion-Dollar Coin”

Chris Hayes debuts tonight at 8pm on MSNBC to precede Rachel each night (Ed Schultz moves to weekend afternoons) and — as we were warned in his exemplary weekend farewell — he will be running “best of” segments until his excellent weekend-morning replacement, Steve Kornacki, from the Cycle (are you getting all this?) gears up two Saturdays from now.

“Best of” segments? Really? Like what, I wondered — the one where he and his panelists spend the whole time walking around a multi-level parking lot looking for their car? No, that’s Seinfeld, and actually the only Seinfeld I can’t watch. I love all the others; hate the parking lot. I grow claustrophobic and agitated just thinking about it. It gives me the jeebies. Loath the lot.

No, there were a bunch of “best of” segments Saturday, one of which was perfect for a re-run because you really have to watch it twice to get your head around it. It’s “the one about the trillion-dollar coin.” Wherein, the Treasury Secretary would mint a platinum coin (although it could be made of anything — gold would do fine; stainless steel, symbolizing infrastructure, might be nice) and deposit it at the Fed, so we wouldn’t need to raise the debt ceiling. We could spend that cash, as needed, instead.

And, yes, it might be a good idea to mint five of them, just in case. (In fairness, we should probably put Ronald Reagan’s face on the obverse, as he halted the long decline in our ratio of National Debt to GDP (from 121% in 1946 down to 30% when he took office) and, by cutting taxes for the wealthy and ramping up military expenditures, headed it back up (to about 100% by the time it was handed to President Obama with the economy on the verge of collapse.) (And unusual though a two-headed coin would be — as unusual as two back to back parentheticals — I see President Clinton on the reverse, as, between the Bushes, he reversed course and got the Debt ratio shrinking again.)

The two things you learn from the segment are, first, that virtually everyone agrees this would be legal. The Treasury Secretary could actually do it. But it’s the second thing is much more interesting, and takes some thinking through: it would not be inflationary and might very well not roil the financial markets. Only to the extent Congress spent that $1 trillion would it add dollars to the economy . . . and only to the extent the economy were “capacity constrained” would adding those dollars to the economy drive up wages or prices.

If the real economy were humming at full employment, appropriating a whole lot of money to rebuild our bridges and schools (say) would drive wages up, as bridge contractors tried to entice construction workers away from the work they were already doing building new homes or skyscrapers — and so on. But in an economy with 23 million un- or underemployed, and so much work that needs doing to keep us competitive, healthy, and secure, we would be insane — let me rephrase, we ARE insane — not to spend that money.

Here are the four segments — first Chris’s overview, then the panel discussion. Special shout out to University of Missouri Professor Stephanie Kelton starting at 3:40 of the next to last: “Mint the Coin, a viable option?”

INFRASTRUCTURE

Fred Campbell: “Please explain how putting billions into infrastructure would shrink our deficit, as you said Friday? Not that I disagree on the concept, it’s just that I think that’s a non-supported claim.”

If we put billions into infrastructure, it will shrink the deficit over the long run two ways: first, by sending the economy back into high gear, putting people back to work to pay taxes rather than receive unemployment (etc.). Second, it will make our economy more productive — as, say, building the Interstate Highway System did. A more productive economy has the capacity to generate more tax revenue (and requires a smaller social safety budget) than a weak one.

In the very short-term, putting billions into infrastructure might add to the deficit (or might not: once private industry sees it’s happening, hiring and investments might be made in anticipation thereof) . . . but only because of the ridiculous way the government does its accounting: money spent to build a bridge that will last 100 years is accounted for no differently from money spent on ammunition that blows up on first use — necessary though it may be. Or money spent to keep troops deployed in Germany. Or money spent by Congress to defend DOMA before the Supreme Court when the Justice Department refused to.